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TMI Blog2024 (6) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of removal to the warehouse or customer s place would be exigible for CENVAT credit, but in view of the amendment made in the definition of input service from 01.03.2008 replacing the word from by the word upto , it would only be upto the place of removal that service could be treated as input service . In Roofit Industries [ 2015 (4) TMI 857 - SUPREME COURT ], the Supreme Court noticed that the place of removal becomes a determinative factor for the purpose of valuation and it has to be seen at what point of time sale is effected, namely whether it is on the factory gate or a later point of time when the delivery of goods is effected to the buyer at the premises of the buyer. The Supreme Court observed that the charges which are to be added have to be upto the stage of transfer of the ownership in as much as once the ownership in goods stands transferred to the buyer, any expenditure incurred, thereafter, has to be on the account of the buyer and cannot be a component which would be included while ascertaining the valuation of goods. The Division Bench of the Tribunal in Hindustan Zinc [ 2024 (4) TMI 817 - CESTAT NEW DELHI ] held that Hindustan Zinc would be entitled to avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porting documents in the nature of purchase orders and invoices, pointed out that since the goods were cleared on FOR destination basis to its customers it was entitled to avail CENVAT credit of the service tax paid on GTA services. 5. A show cause notice dated 27.04.2018 was, however, issued to the appellant proposing to recover and demand CENVAT credit amounting to Rs. 3,74,34,023/- with interest and penalty relying on the judgment of Supreme Court in Ultra Tech Cement. It was alleged that the place of removal would be the factory gate of the appellant and, therefore, CENVAT credit beyond the factory gate till the premises of the buyer would not be admissible in terms of the definition of input service under rule 2(l) of the 2004 Credit Rules. The demand was proposed invoking the extended period of limitation under section 11A(4) of the Excise Act. 6. The appellant reversed CENVAT credit amounting to Rs. 1,44,03,192/- along with interest of Rs. 34,14,065/- in respect of outward GTA services for the period from April 2013 to June 2017. 7. The Commissioner, by the impugned order dated 28.08.2018, upheld the allegations made in the show cause notice and confirmed the demand basis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word from by the word upto , it would only be upto the place of removal that service could be treated as input service . The relevant observations of the Supreme Court in Ultratech Cement are as follows: 7. It may be relevant to point out here that the original definition of input service contained in Rule 2(l) of the Rules, 2004 used the expression from the place of removal . As per the said definition, service used by the manufacturer of clearance of final products from the place of removal to the warehouse or customer s place etc., was exigible for Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 of 2016 (Commissioner of Central Excise Belgaum v. M/s. Vasavadatta Cements Ltd.) vide judgment dated January 17, 2018. However, vide amendment carried out in the aforesaid Rules in the year 2008, which became effective from March 1, 2008, the word from is replaced by the word upto . Thus, it is only upto the place of removal that service is treated as input service. This amendment has changed the entire scenario. The benefit which was admissible even beyond the place of removal now gets terminated at the place of removal and doors to the cenvat credit of input tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the context of upto the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board s circular, nor it could be. ***** 13. The upshot of the aforesaid discussion would be to hold that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent. Accordingly, this appeal is allowed, judgment of the High Court is set aside and the Order-in-Original dated August 22, 2011 of the Assessing Officer is restored. (emphasis supplied) 14. A perusal of the aforesaid judgment of the Supreme Court in Ultra Tech Cement would indicate that the Supreme Court did not lay down the principles for ascertaining the place of removal in the context of admissibility of CENVAT credit on GTA services and the judgment only dealt with the change brought about by the amendment made in rule 2(l) of the 2004 Rules on 01.03.2008. This is how the Larger Benches of the Tribunal in The Ramco Cements and Sweety Industries vs. Commissioner of CGST Central Excise [Excise Appeal No. 12738 of 2018 decided on 14.02.2024] also interpreted the decision of the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular no. 97/8/2007-CX dated 23.08.2007 are also omitted from the date of issue of this circular. 3. General Principle: As regards determination of place of removal , in general the principle laid by Hon ble Supreme Court in the case of CCE v. Ispat Industries Ltd. - 2015 (324) E.L.T. 670 (S.C.) may be applied. Apex Court, in this case has upheld the principle laid down in M/s. Escorts JCB (supra) to the extent that place of removal is required to be determined with reference to point of sale with the condition that place of removal (premises) is to be referred with reference to the premises of the manufacturer. The observation of Hon ble Court in para 16 in this regard is significant as reproduced below: 16. It will thus be seen where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be normal value thereof. Sub-clause (b)(iii) is very important and makes it clear that a depot, the premises of a consignment agent, or any other place or premises from where the excisable goods are to be sold after their clearance from the factory are all places of removal. What is important to note is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Court has observed that after amendment of in the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, effective from 1-3-2008, the service is treated as input service only up to the place of removal . 6. Facts to be verified : This circular only bring to the notice of the field the various judgments of Hon ble Supreme Court which may be referred for further guidance in individual cases based on facts and circumstances of each of the case. Past cases should accordingly be decided. (emphasis supplied) 17. As the aforesaid Circular refers to the decision of the Supreme Court in Ispat Industries, and Commr. of Cus. Ex., Aurangabad vs. Roofit Industries Ltd. [2015 (319) E.L.T. 221 (S.C.)], it would be useful to reproduce the relevant portions of the judgment of the Supreme Court in the aforesaid two decisions. 18. In Roofit Industries, the Supreme Court noticed that the place of removal becomes a determinative factor for the purpose of valuation and it has to be seen at what point of time sale is effected, namely whether it is on the factory gate or a later point of time when the delivery of goods is effected to the buyer at the premises of the buyer. The Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. 15. These are clear finding of facts on the aforesaid lines recorded by the Adjudicating Authority. However, the CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgment in the case of Escorts JCB Ltd. Obviously the exact principle laid down in the judgment has not been appreciated by the CESTAT. 19. In Ispat Industries, the issue involved was whether by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer s premises, treating the buyer s premises as the place of removal. The Supreme Court noticed the earlier decision of the Supreme Court in Roofit Industries in paragraph 31 of the decision and made the following observations in paragraph 32. 32. It will be seen that this is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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